Articles Posted inCryptocurrency

A report compiled by the leading cryptocurrency intelligence firm, CipherTrace, gives details about the current state of major crypto-based criminal activity. Main highlights of this report include the increase in cross-border crypto payments, Iran’s growing interest in cryptocurrency as a means to sidestep sanctions, and the $356 million in cryptocurrency thefts in that quarter alone. These findings are an attempt to discover common trends in order to assist in developing future legislation against such corruptions.

CipherTrace is a well-known and highly-developed intelligence operation that works to build solutions for monitoring and regulating crypto-based fraud. CipherTrace is often used by leading exchanges, banks, investigators, regulators, and digital asset businesses in order to trace transactions and display compliance with current anti-money laundering regulations in hopes of building trust in the cryptocurrency economy. Their quarterly reports have become a vital data resource when it comes to monitoring and the legislation of crypto transitions.

CipherTrace’s report for this quarter shows a concerning trend involving cross-border crypto payments becoming untraceable as they leave U.S. exchanges after entering offshore locations. In twelve months the crypto transfers from the U.S. exchange to offshore exchanges grew 21 points or 46 percent when compared to the same period from two years before. These transactions fall out of U.S. awareness as they leave the exchange, making them blind spots that are highly difficult to monitor or regulate.

Despite its cons, cryptocurrency has introduced powerful technologies to the market, including blockchain protocols which essentially act as an advanced ledger for cryptocurrency exchanges. However, this technology is now being utilized for the protection of numerous industries, including the healthcare industry by preventing counterfeit pharmaceuticals from entering the market.

A paper published by Portland University researchers outlined how blockchain technology could be used as an anti-counterfeiting system for numerous industries. But, understanding how this technology can be applied to various markets means taking a closer look at its use in cryptocurrency.

Essentially, cryptocurrency platforms utilize blockchain technology to store and track the incoming and outgoing transactions that they facilitate. These transactions are stored across numerous computers that are linked by a peer-to-peer network. The history of transactions stored on the blockchain is extensive, and allow those in control to view a detailed account of exactly what is going on with each transaction.

In hopes of helping society grow and to allow everyone gain more insight into exactly how crypto tokens will be viewed in the eyes of the law, the U.S. Securities and Exchange Commission (SEC) has released a regulatory guidance document that outlines how and when cryptocurrency should be used and what certain tokens will be classified as, though mainly in reference to securities.

The first to state that regulators were working to develop new guidance for crypto tokens was SEC Director of Corporation Finance, William Hinman, in November of 2018. Others have also made it clear that this was a solid plan for the future of society including Valerie Szczepanik, FinHub head, and Commissioner Hester Peirce.

Hinman revealed that the guidance would be in “plain English” and allow anyone invested in crypto tokens to seamlessly be able to determine its qualification as a security offering. The document includes a plethora of useful information as well as examples of both tokens and networks that could be considered securities under the law, and a few examples of those that do not.

In January of 2019, it was discovered that an online attacker had hacked Coinbase and processed over $1.1 million in what the cryptocurrency industry refers to as “double spends”. However, this is not the only incidence of blockchains being hacked since its increasing popularity on the market. In fact, since 2017 it is estimated that over $2 billion worth of cryptocurrency has been stolen by hackers. But, how have blockchains, which were once deemed as unhackable, become the latest source of fraudulent activity?

Two Documented Years of Hacking Activity

Since 2017, authorities have uncovered billions of dollars worth of stolen cryptocurrency due to online attackers. However, it is estimated that even more funds have been taken during this time. Two groups alone are suspected of profiting over $1 billion combined, but the extent of their reach, as well as others, is largely unknown. As the market for blockchain encryptions becomes larger and larger, it appears as though its vulnerability to hackers is also increasing. This could mean that the fraudulent activity associated with blockchain hacking is just beginning.